Bloomberg News

Ethanol Rises to Six-Week High on Growing Discount to Gasoline

February 26, 2012

Feb. 24 (Bloomberg) -- Ethanol futures rose to a six-week high on speculation the biofuel’s growing discount to gasoline will stoke demand.

Futures jumped the most in almost three weeks as gasoline’s premium to ethanol increased to 91.68 cents a gallon for the front-month contract, up from 48.33 cents at the end of 2011, making the additive more attractive to refiners. The premium to reformulated blendstock, or RBOB, was more for later contracts.

“People feel the downside is limited with RBOB trading at $1.05 over ethanol in their April contracts,” Justin Dirico, senior ethanol trader at SCB & Associates LLC in Chicago said in an e-mailed report. “The market is well oversupplied with stockpiles up 11 percent from a year ago.”

Denatured ethanol for March delivery increased 2.6 cents, or 1.2 percent, to $2.236 a gallon on the Chicago Board of Trade. Prices are down 10 percent from a year ago.

In cash market trading, ethanol in New York surged 4 cents, or 1.8 percent, to $2.28 a gallon and in the U.S. Gulf the biofuel added 3 cents, or 1.4 percent, to $2.225, according to data compiled by Bloomberg.

Ethanol on the West Coast rose 1 cent, or 0.4 percent, to $2.305 a gallon and in Chicago the additive climbed 0.5 cent to $2.18.

March-delivery gasoline rose 3.92 cents, or 1.3 percent, to $3.1528 a gallon on the New York Mercantile Exchange, the highest settlement since July 26. Gasoline has gained 4.5 percent this week and 17 percent in 2012.

--Editors: Richard Stubbe, Charlotte Porter

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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